M Abbas Hassan
FOR a country like Pakistan, the international politics and policies play an important role in shaping its future outlook. The Pakistani economic system which at times is labeled as corrupted to the core is heavily depended on a number of external factors that range from its exports to the West to the foreign remittances which are predominantly from the Middle East and United States of America. The relations with China also play a crucial role and this was witnessed when China rolled out its Belt and Road Initiative in which Pakistan is the lynchpin. So when the current government came into power on the promise that it will revive the economy of Pakistan, it was looking at an uphill task. Banking on the idea that if the leadership is not corrupt the system will automatically fine tune itself was wishful thinking on the part of the new government. Within days it realized that it is actually the other way around. The ground realities were not only different but alarming. With rates pegged by the previous government, the Pakistani economy went into a tailspin and the rupee depreciated like a stone rolling off a cliff. Then came the shock of foreign debt servicing, poor tax collections, dwindling exports, monstrous fuel bill, irregularities in the system, a violent neighbor that launched an air strike inside country and a circular debt the size of K2.
Within months, the same government that gave hopes to the people and promised change was getting severe criticism. The government on the other hand was experimenting with the system and was unable to come up with a strategy to counter the problems. Initially the government was reluctant to go to the International Monetary Fund, something the Kaptaan himself had severely criticized during the campaign, but in reality it had no choice. The government finally uprooted its economic team and installed new people who successfully negotiated a plan and provided some cushion to the government. This buffer was closely monitored and Financial Action Task Force (FATF) was also breathing down the neck of the government. As Pakistan started to get on the recovery track it was caught up with the internal politics of the party where the fragments put up hurdles in the way for the government. Time and again the Kaptaan interfered and shuffled the cabinet to keep the team on track. As a result the trust of the people kept on deteriorating. On top of that the media team of the government was also not doing a good job. The ill prepared appearance in front of ruthless anchors was making a mockery of the government.
The year 2020 started on a positive note for the country. Pakistan was labeled as one of the top tourist destinations by international analysts, Pakistan Super League along with the foreign players’ came home, the current account deficit started to shrink, stock market was on track and the exchange rate was finding some stability. On these factors the government was planning out a strategy to work on its initial agenda of welfare and turning the country around. However, all these plans were hit with an iceberg in the form of Corona Virus outbreak that originated from China. Initially no one was in a position to predict how this outbreak will shape up the current world order. The airlines continued their operations and the shipping lanes remained busy. All of this came to a sudden halt when the number of cases started to rise exponentially across the globe. For Pakistan this was trouble because its exports were going dormant and no future orders were in sight due to the lockdowns. As factories started to close down in Pakistan and people asked to stay at home, the death gong for the economy was struck. Kaptaan realizing the nature of disaster appealed to people to care for the significant proportion of the population that lives below the poverty line. An emergency stimulus package was announced and the magnitude of social security programme Ehsaas was increased.
Still this was not enough; Pakistan pays a lot of money in the form of debt servicing and with no exports and industries closing down, the revenue collection of Pakistan looked grave. The international agencies were also predicting a negative growth of GDP for the country. Having a strong faith in humanity and greater good for the developing economies, the Kaptaan launched his Global Debt Relief Initiative. The idea was to ask for financial relief from the top economies of the world. Fortunately for Pakistan the world listened and the Pakistani diplomacy prevailed. At G20 conference a generous relief package was announced for 76 countries. Under this initiative Pakistan will not have to make debt servicing payment for the end of current year and the money will not be repayable till year 2022. This comes as a mammoth relieve of almost $12 billion. On top of that IMF also announced a Rapid Financing Instrument to Pakistan worth $ 1.4 billion.
This announcement has come as a breath of fresh air for Pakistan and COVID 19 indeed has become a blessing for the country. With a financial relief available to the country, the government can go ahead with its plans of reviving the country. The stock market also showed a positive rally as the index rose to 4.8% on Friday and the rupee strengthened significantly. The government has already announced a relief package for the construction industry which means that the wheels of economy will be set into motion. Pakistan can now also concentrate on building a long term strategy to utilize this money in social welfare and development sector projects. The Corona outbreak has clearly been a wakeup call for the world. The French President is now leading his initiative of global cease fire. Pakistan needs to invest more into education and health sectors. The money, if utilized properly, cannot only save political future of the ruling party but will also shape destiny of the country. If this is not handled properly, Pakistan will fall into an abyss and from there a recovery would not be possible.
—The writer is Research Associate at Institute of Strategic Studies Islamabad.
